1. FINANCE, PROTECT, AND INSURE YOUR BUSINESS
Entrepreneurship
4/16/2017
Chapter 7
FINANCE, PROTECT, AND INSURE YOUR BUSINESS
7.1 Put Together a Financial Plan
7.2 Obtain Financing for Your Business
7.3 Protect Your Business
7.4 Insure Your Business
Chapter 7

2. Chapter 7
7.1 Review
What are the one time only expenses that are paid to establish a business
Start-up costs
Describes how much cash goes in and out of a business over a period of time
Cash flow statement
Expenses that are incurred by a business every month
Operating expense

3. Chapter 7
7.1 Review cont.
A financial statement that shows how much money a business earns or loses
Income statement
Shows the assets, liabilities, and capital of a business at a particular point in time
Balance Sheet
What is the accounting equation?
Assets= Liabilities+ Owner’s equity

4. 7.1 Review cont. Types of Assets Types of Liabilities
Chapter 7
7.1 Review cont.
Types of Assets
Fixed, current, A/R
Types of Liabilities
Long-term, current, A/P
The amount a company estimates it will not receive from customers
Uncollectible accounts
Lowering of an assets value to reflect its current worth
depreciation

5. Lesson 7.2 OBTAIN FINANCING FOR YOUR BUSINESS
Chapter 7
Lesson 7.2 OBTAIN FINANCING FOR YOUR BUSINESS
GOALS
Consider different types of bank loans.
Explain Small Business Administration loans.
Evaluate other sources that can provide debt capital.

6. Chapter 7
Many companies take out loans from banks. You obtain debt capital when you borrow from banks. Debt capital is money loaned to a business with the understanding that it will be repaid, with interest, in a certain time period.

7. Chapter 7
BANK LOANS
Types of bank loans
Secured loans
Unsecured loans

8. Chapter 7
Secured Loans
Secured loans are backed by collateral, which is property that the borrowers forfeit of he or she defaults on the loan.
Types of secured loans
Line of credit- money whenever the borrower needs it.
Short-term loan- made for a specific purpose; repaid within a year.
Long-term loan- payable over a period longer than a year.

9. Chapter 7
Unsecured Loans
Loans that are not guaranteed with property. These loans are only made to the bank’s most creditworthy customers.

10. REASONS A BANK MAY NOT LEND MONEY
Chapter 7
REASONS A BANK MAY NOT LEND MONEY
The business is a start up- has no record of repaying loans
Lack of a solid business plan- poorly written
Lack of adequate experience
Lack of confidence in the borrower
Inadequate investment in the business- banks are suspicious of entrepreneurs who don’t invest their own money

11. SMALL BUSINESS ADMINISTRATION LOANS
Chapter 7
SMALL BUSINESS ADMINISTRATION LOANS
SBA loan assistance
Requirements of SBA loans
Apply for an SBA loan

12. REQUIREMENTS OF SBA LOANS
Chapter 7
REQUIREMENTS OF SBA LOANS
Your business must be considered a small business.
Your business must not be the leader in its field.
Your business must comply with all federal employment laws.
Your business cannot create or distribute ideas or opinions.
You must have been unable to obtain financing from a commercial bank.
You must invest a reasonable amount of your own money in the venture.
You must provide adequate collateral.

13. OTHER SOURCES OF LOANS Small Business Investment Companies—SBIC
Chapter 7
OTHER SOURCES OF LOANS
Small Business Investment Companies—SBIC
Minority Enterprise Small Business Investment Companies—MESBIC
Department Of Housing And Urban Development—HUD
Economic Development Administration—EDA
State governments
Local and municipal governments

14. FINANCE YOUR BUSINESS WITH EQUITY CAPITAL
Chapter 7
FINANCE YOUR BUSINESS WITH EQUITY CAPITAL
Equity capital is money invested in a business in return for a share in the business’s profits.
Sources of equity
Personal financing
Friends and family
Venture capitalist- people or companies who make a living by providing loans to start-up businesses